5-YEAR LABOR PACT COULD SAVE $20M

Mayor Filner pushing for agreement, but council Republicans remain unpersuaded

The city could free an additional $20 million in its $1.2 billion operating budget if it can reach a five-year contract with its employee unions that includes a freeze on workers’ pensionable pay, solidifying a key provision of the voter-approved Proposition B.

Mayor Bob Filner is pushing for such a deal and a City Council majority agrees, yet there’s a decent chance it won’t happen.

That’s because there’s strong disagreement between the council’s Republicans and Democrats about how much of a financial incentive unions should be given to sign off on a deal. Under Proposition B, it takes six council votes to finalize a labor contract that includes a pay hike, and the panel currently has a 4-4 partisan split.

Filner, a Democrat who won last year’s mayoral contest with significant financial support from unions, is advocating for across-the-board salary increases for workers, while the Republicans say any increase should be modest and sustainable. The raises under consideration would be nonpensionable and therefore can’t be used to bolster future pensions.

In an interview, Filner said he doesn’t understand why the same Republicans who backed Proposition B — which calls for a five-year pensionable pay freeze — won’t support it in labor negotiations.

“I don’t understand why it’s not a no-brainer for these guys,” Filner said. “Everything being equal, a five-year deal has all kinds of other things. That is, you get stability. You don’t have to pay your labor negotiators. You don’t have to worry about a contract every year. And because we have (budget) surpluses projected, you can give employees stuff (so) that they see light at the end of the tunnel, and it helps morale and everything. So I don’t understand their resistance.”

Specifically, Filner said he wants the five-year contract to gradually restore the 6 percent compensation cut that all workers took beginning in 2009. The city’s roughly 10,000 employees haven’t had an across-the-board pay increase since then, although about half received raises through promotions and step increases.

Filner and City Council members are prohibited from disclosing what is discussed in closed session regarding labor negotiations, but the Republican council members have hinted that Filner is seeking much more than a 6 percent pay hike.

Councilman Kevin Faulconer, who would talk only generally about negotiations, said the mayor “needs to be honest” with the public about what he’s proposing.

“I will not support double-digit, across-the-board government salary increases,” Faulconer said.

Michael Zucchet, head of the city’s largest union representing white-collar workers, declined to comment for this story, citing the ongoing negotiations.

The pension system’s actuary has estimated a five-year freeze would slash $25.2 million off the coming year’s $275 million pension payment. About $20 million of that would apply to the general fund. Over five years, the general fund would see about $110 million in combined savings.

Every 1 percent in across-the-board salary increases for city workers costs about $5 million annually to the general fund, so restoring the 6 percent cuts immediately would cost $30 million annually. That would create a $10 million deficit in the first year. A more realistic option would be to spread the increase gradually over the five years.